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UDC: 005.52:005.33
005.71
COBISS.SR-ID: 220024076
CONFERENCE PAPER
Implications of Business and Economic Environment and
Strategic Management and Performance Management in
Selected Countries of Central and Eastern Europe (CEE)
1
Balcar Petr , Taušer Jozef, University of Economics, Faculty of International Relations,
Prague, Czech Republic
ABSTRACT – This paper focuses on main characteristics of the recent development of the
business environment, business education and management procedures in selected countries of
Central and Eastern Europe (CEE), the Baltic and Balkan countries, and emphasizes important
aspects influencing business performance. Our conclusions are based on analyses of 30 international
business companies, nonprofit, and public organizations, academic and business sources, and on our
personal hands on business experience. We have observed differences especially in long-term
development of entities, strategic management, controlling, performance management, employee
appraisal, as well as other areas related to performance management. Due to space limitations we do
not include a comparative analyses of procedures based on identical aspects for selected countries but
rather emphasize the most important elements.
KEY WORDS: strategic management, process management, performance management, financial
management, CEE countries and managerial performance
Introduction
The goal of this article is to assess the business environment and governance procedures
in selected countries of Central and Eastern Europe (CEE), and the Baltic and Balkan
countries. The research is based on a sample of 30 international business companies,
nonprofit, and public organizations. Key strategic and performance-related issues that help
business firms and other organizations cope will be our focus and we will investigate the
details of managerial approaches in respective countries in order highlight both the
weaknesses and strengths within the CEE region. This will provide the foundation for
systematic highlighting of the main challenges that the region faces to keep up with
advanced western capitalist economies.
More specifically, we focus on strategic management and performance management
characteristics and specific needs for improvement to catch up and compete successfully in
the international business arena. This research topic is part of a broader goal for our work.
1 University of Economics, Faculty of International Relations, W. Churchill Square 4, 130 67 Prague 3,
Czech Republic, balcar.petr86@gmail.com
10 Economic Analysis (2015, Vol. 48, No. 3-4, -9-28)
We also include information from on our hands-on experience working with firms, and in-
depth interviews with their top management.
The anticipated outcome of this paper is to develop to the extent to which it is important
to use effectively standard strategic procedures and management processes to achieve
a competitive level of performance in production, sales and service provision in international
business. Gaining and maintaining a competitive advantage are key conditions of success in
current business dynamics. This paper emphasizes key steps for success in selected world
regions influencing international business cooperation.
From the authors’ experience in working with a wide variety of smaller, especially start
up firms; they quite often do not emphasize quality of governance. Both the shareholders
and the management primarily focus on core business operations that support a fast launch
of products and services into the market. Their primary goal is the growth of output and
revenue. Investments in management systems and governance improvement, especially
supporting improvement of effectiveness and competitiveness have lower priority. We have
observed the lack of attention to this goal also among several large international business
players. The public sector especially has much room for improvement of governance
procedures.
We also aim to provide general conclusions on the extent to which it is important to
improve governance, the managerial processes of organizations and professional core-
business- related development. Tracking all up-to-date development trends, especially in
Information Systems and Information Technology (ISIT), is difficult. In the past two decades
many organizations have decided to outsource key processes and activities, including parts
of ISIT functions. The “profile”, i. e. strategically important activities, however, usually
remained with the know-how “owners”, within a core business. Because ISIT has not only an
infrastructure supporting function, but it is integral to all company business processes, this
paper focuses on how effectively ISIT is used by our sample entities. Finally, we include a
full comparative analysis for the most important elements of procedures, based on the same
characteristics for selected countries.
Worldwide management system trends
Business procedures vary substantially in many aspects across geographical areas. These
differences can be ascribed to specific fundamental values, cultural traditions, working
habits, and by economic and overall level of progress. One would expect, however, that
governance of companies and institutions worldwide should be rather similar in principle.
Nevertheless, differences in governance internationally occur not only among various
industries but also within the same sector. Such differences also exist within geographically
and culturally similar regions. In general, there is almost never only one best management
solution, especially in a combination with an ISIT solution. It is always important to consider
“Best Practices” experience relevant to the nature, size and other specifics of an organization
in question. For doing business internationally it is crucial to align optimally Best Practices
within a particular sector, with circumstances of the respective geopolitical region,
expectations and preferences of shareholders and thus the management.
Balcar, P., et al., Selected Countries of CEE, EA (2015, Vol. 48, No. 3-4, 9-28) 11
High quality governance is closely linked with core business competences. It is the key
precondition for a long term conceptual strategic approach to the organization’s
development. Business process areas are usually grouped as outlined below with selected
typical processes falling into these groups:
• Management processes as primarily strategic management, risk management, research
and development, legal services, process and organization structure maintenance, internal
audit, PR and communications;
• Core processes as the ones that represent the primary specialization of an organization;
and
• Infrastructural processes as finance, ISIT (penetrating into all company processes), human
resources, security and safety.
Company processes need to be aligned and effectively managed in a coordinated way
throughout the entire value chain. It is crucial primarily to use available theoretical sources
on management, ideally in relevant sectors, to set a rational balance in designing and
executing all processes that are supporting achieving and keeping a company’s competitive
advantage.
Another important step is to analyze the degree of success in implementing the theory
into practice, i. e. an ability to suggest and adopt, based on an up to date theory, steps
towards entity’s performance improvement. We need gradually to analyze results, consider
needs for ongoing corrections and take actions towards strategy improvements. It is
necessary to utilize effectively a potential for implementation of new information. An
anticipated outcome of this task would be to balance the status among learning new skills,
speed of their implementation, quality of work and the final organization’s outcome.
Unlike as claimed in former communist countries we do not recognize two separate types
of economic theories and thus business categories, domestic versus international. There is
only one “business world”, even if operations are not international. Due to a gradual
opening of many economies towards international trade of goods, services, information,
knowledge, science and values we only need to consider specifics of various geopolitical
regions.
An impact of international aspects of doing business on the importance of using
a strategic approach and, consequently, structured financial and performance management
in international business, is another focus of this article.
Analysis of current situation – key issues
This analysis includes the managerial environment of companies operating in various
countries, in connection with their existing local political, economic, and business
environment. The sample entities operate both domestically internationally. The key
research areas are strategic management and performance management, and their
connection to financial management and controlling.
An initial analysis will be a starting point for stating hypotheses and a consequent testing
in a dissertation that will follow. The main theoretical bases used for the analyses portion are
standard frameworks and procedures of strategic management such as Strategic
Management Framework by Fred David (2013):
12 Economic Analysis (2015, Vol. 48, No. 3-4, -9-28)
Diagram 1. A Comprehensive Strategic-Management Model
Source: David (2013), p. 47
The above Strategic-Management Model outlines particular phases and components of
strategic management, which can be linked to a controlling framework, comprehensive
performance management framework models such as the Balanced Scorecard, to modern
financial management concepts such as CFO Framework, and to other current governance
practices. Due to its logical structure this comprehensive strategic model is compatible with
process based management approaches and can be used in a process based organization.
The following scheme shows how a Balanced Scorecard performance management
framework that includes evaluation and feedback is linked with a strategy.
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